Because the crisis has hit some places and industries much harder than others, it’s difficult to get a clear, big picture of the market’s troubles — one reason lobbyists have struggled to convey the urgency to policymakers. Some assets have been wiped out, while others are thriving.
Hotels and retail, which together make up 40 percent of the commercial mortgage-backed securities market, have been hit the hardest. Months after lockdowns lifted, 1 out of every 2 hotel rooms remains unoccupied. Urban hotels, which have some of the largest operating costs, are faring the worst, with just 38 percent occupancy rates.
And retail, which was already struggling before Covid struck thanks to the rise of e-commerce, has seen its decline hasten. It’s not just small strip malls, either: The owner of the $1.9 billion Mall of America entered into an agreement with its special servicer in August to avoid foreclosure.
One quarter of all CMBS hotel loans are in special servicing today, compared with just 1.9 percent at the end of 2019. And 18.3 percent of retail loans are in special servicing, up from 5 percent at the end of last year.